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NSSF, Kibale MP sign 22b investment deal
By Cyprian Musoke
and Moses Mugalu
THE NSSF on September 10 signed a sh22b deal with the Uganda National Farmers Federation, led by Kibale MP Frank Tumwebaze, to develop half an acre of prime land in Kampala.
Following the controversy over the sh11b Temangalo land deal, which broke in August, the workers’ associations had demanded that all new investments by NSSF be suspended pending the findings of a parliamentary probe committee.
In the agreement, signed by David Jamwa for the National Social Security Fund (NSSF) and Tumwebaze for the Farmers Federation, NSSF is to avail $12,603,816 to develop Plot 27 on Nakasero Road, which is owned by the Uganda National Farmers Federation.
According to Tumwebaze, a 10-storey structure with office space to let will be constructed and the money, borrowed from NSSF at 14% interest per year, is to be repaid in 15 to 20 years.
“When completed, we’ll occupy one of the floors and the rent from the rest of the floors would be used to pay back the loan,” Tumwebaze told Sunday Vision.
Commercial banks in Uganda give loans at interest rates of between 16% and 25%. Under the agreement, the farmers’ federation will propose the contractor, who will be screened and approved by NSSF.
The project falls under a special arrangement termed ‘Build, Own, Operate and Transfer’ (BOOT).
“Under the BOOT facility, the land is being transferred into NSSF’s names, for security purposes,” explained Jamwa, NSSF’s managing director.
“We build in our name and operate the building. We take all the rent until we have recovered the cost and interest. NSSF then returns the building and the land to the federation.”
Reports about the new deal come at a time when the probe committee is locked in a debate on whether the Temangalo land deal was a procurement, in which case it was to follow the (Public Procurement and Disposal of Assets) PPDA rules, or an investment, in which case it was subject to NSSF’s internal rules.
Tumwebaze is believed to be part of the group that is advocating for the resignation of NRM secretary general Amama Mbabazi over the Temangalo land deal for not following protocol.
Asked whether he ensured that NSSF followed the PPDA rules in the Nakasero deal, he said: “PPDA for what? As far as I am concerned, PPDA is for procurement and disposal. So I really don’t know whether NSSF in coming up with the BOOT arrangement follows the PPDA rules.”
He explained that they had tried to secure a loan from the East African Bank and the Nairobi-based Shelter Afrique to develop their premises, but the terms were too high.
“We got information about NSSF’s BOOT facility in July 2007. We submitted our feasibility study for the project and after surveying they found it viable and asked us to submit our application.”
The application was approved by the Minister of Finance, he noted, but delayed at the Solicitor General’s office until last month when they were called in to sign.
Asked how they arrived at the sh22b price, Tumwebaze said it was drawn from a concept of two consultant firms, contracted by the farmers association and reviewed by NSSF. No independent valuer was used to establish the cost of the building.
“Valuation would be a waste of time and money because we were not purchasing the land,” Jamwa said. “Everybody knows what an acre of land costs in Kampala. What we are interested in is can we recover our money in about 20 years?”
Asked if it would not have been more prudent to postpone the signing until the committee had finalised its report and the recommendations agreed on with the trade unions, both Jamwa and Tumwebaze said the negotiations had started over a year ago and the signing was only the final phase.
Sources said several members of the executive committee of the National Farmers Federation, including the treasurer, have not been officially informed about the transaction.
Published on: Saturday, 18th October, 2008
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